September 25, 2012

India's 2012-13 grain production may fall 9.8%

Despite a monsoon revival in August and September, India's kharif food grain production is expected to fall by 9.8% in the 2012-13 season and would dim hopes of a significant drop in food inflation.

The kharif production is pegged at 117.8 million tonnes in the 2012-13 season, which started in June, as against 129.94 million tonnes a year ago. Barring tur and soy, the production of every kharif crop would fall, according to the first advance estimates for 2012-13 kharif production released today (Sep 25). The reason cited is uneven rainfall.

However, officials are hopeful the loss in kharif production would be offset by an improvement in rabi crops due to the heavy rains in August and September. According to the estimates, rice production is projected to fall by 6.48% to 85.59 million tonnes, while the output of coarse cereals is estimated to fall by 18.28% to 26.33 million tonnes.

The production of pulses during the kharif season is estimated to drop by 14.61% to 5.26 million tonnes, while the production of oilseeds is estimated to fall by 9.62% to 18.78 million tonnes.

"Food inflation would remain high, in the 9-10% range, in the next few months as the possibility of the kharif harvest cooling down prices of some commodities is not there," said Madan Sabnavis, chief economist at CARE rating agency. India's wholesale price-based food inflation in August was 9.14%, a fall from 10.06% in July.

"There were uncertainties about the monsoon as rains were delayed. As a result, our estimates may be lower than last year but they are better than expected," Agriculture Minister Sharad Pawar told reporters after releasing the data. He hoped the shortfall would be covered during the rabi season.

The data showed cotton production was projected to fall by 5.11% to 33.40 million bales (1 bale=170 kilogrammes) and sugarcane output to drop by 6.2%t to 335.33 million tonnes. Experts said the biggest cause of concern would be the drop in the output of pulses and oilseeds to some extent as the dependence on imports would increase.

The south-west monsoon, which provides almost 70% of the total moisture required for crops, has had a rather uneven run in 2012. From a shortfall of almost 20% during the first two months of the June-September season, the rainfall at present is just 5% below normal.